Black Diamond, Inc., a manufacturer of carbon and
graphite products for the aerospace and transportation industries,
is considering several funding alternatives for an investment
project. To finance the project, the company can sell 1,000 20-year
bonds with a $1,000 face value, 6% coupon rate. The bonds require
an average discount of $50 per bond and flotation costs of 3% of
bond price. The company can also sell 5,000 shares of preferred
stock that will pay a $2.5 dividend per share...